He bought land with the intention of selling it. How should he pay zakaah on it?

Question

I bought some land for 115,000 riyals with the intention of selling it, and one year has passed. Do I have to pay zakaah? How much is the threshold of zakaah (nisaab) in Saudi riyals, if zakaah is due on it?.

Answer

Praise be to Allaah.

The fact
that you took possession of the land with the intention of selling it means
that zakaah is due on it every year, so you should calculate the value of
the land at the end of the year and pay zakaah on this amount. The rate of
zakaah that must be paid on it is one-quarter of one-tenth, i.e. 2.5%, which
should be paid in the ways specified by Allaah in the verse (interpretation
of the meaning):

“As-Sadaqaat (here it means Zakaah) are only for the Fuqaraa’ (poor), and
Al-Masaakeen (the poor) and those employed to collect (the funds); and to
attract the hearts of those who have been inclined (towards Islam); and to
free the captives; and for those in debt; and for Allaah’s Cause (i.e. for
Mujaahidoon — those fighting in a holy battle), and for the wayfarer (a
traveller who is cut off from everything); a duty imposed by Allaah. And
Allaah is All-Knower, All-Wise”

[al-Tawbah 9:60]

It should be
noted that if goods for trade are bought with gold, silver or cash money
(riyals, dollars or other currencies), or in return for other goods
(barter), then the year for calculating zakaah starts from the time when you
acquired the wealth with which you paid for the goods. Based on this, then
the year for the goods does not start from the time you took possession of
them, rather it starts from the time you acquired the wealth with which you
paid for them.

For example: if a man
takes possession of one thousand riyals in Ramadan, then he starts the
reckoning of the year. Then in Sha’baan of the following year (i.e., one
month before the year ends) he buys some goods for trade with this thousand,
then he should pay zakaah on these goods in Ramadaan, in other words just
one month after he took possession of them. That is because the year for
these goods is based on the year for the money with which they were bought.

Zakaah is
due on land that is prepared to be bought and sold, because it comes under
the heading of trade goods, and thus is included in the general meaning of
the texts of the Qur’aan and Sunnah which state that zakaah is obligatory,
such as the verse (interpretation of the meaning):

“Take
Sadaqah (alms) from their wealth in order to purify them and sanctify them
with it”

[al-Tawbah 9:103]

And Abu
Dawood narrated with a hasan isnaad that Samurah ibn Jundub (may Allaah be
pleased with him) said: The Messenger of Allaah (S) commanded us to pay
zakaah on whatever we had prepared for sale. This is also the view of the
majority of scholars, and it is the truth.

The Standing
Committee was asked:

With regard
to lands that are bought for the purpose of selling, how should we calculate
them when we calculate zakaah – should we base it on the price for which we
bought them or on the market value at the time when the year for zakaah has
passed?

They
replied:

Lands that
are bought for the purpose of selling come under the heading of trade goods.
The general principle in Islamic sharee’ah is that trade goods are to be
calculated upon the completion of one year at market value, regardless of
the price for which they were bought, whether that was more or less than the
market price at the time when zakaah becomes due. The zakaah should be paid
from their value. The rate of zakaah is one-quarter of one-tenth. So for
land worth one thousand riyals, for example, the zakaah is twenty-five
riyals, and so on.

Fataawa
al-Lajnah al-Daa’imah, 9/324, 325.

With regard to the
nisaab for zakaah, as previously stated in question no.
42072, the nisaab
for zakaah on gold is twenty dinars i.e., 85 grams of gold; the nisaab for
silver is two hundred dirhams, i.e., 595 grams of silver.

The nisaab for money (i.e., Saudi riyals or other currencies) is whatever reaches the value of the nisaab for gold or silver. As the value of silver is now less than that of gold, the nisaab for money now is the equivalent of 595 grams of silver.